Estate Planning For Peace Of Mind

What a trust can do for your estate plan

On Behalf of | Jun 18, 2024 | Estate Planning |

There are several legal documents you can add to your estate plan. Your main document is a will, which can instruct how your assets are distributed after you pass away. 

Another document that you can add is a trust. A trust is a legal arrangement that works similarly to a will, yet it can provide several advantages. You can use a trust to securely distribute assets to beneficiaries without facing estate taxes, disputes and probate.

There are several trusts to choose from. Here is what you should know:

4 kinds of trusts to add to your estate plan

You can have more than one kind of trust. Different kinds of trust can be used for specific purposes. Here are a few: 

  1. Spendthrift trust: This trust is used to limit access to assets for beneficiaries who struggle to maintain finances. You can still provide a comfortable life to beneficiaries without worrying that they will waste their inheritance. 
  2. Incentive trust: This trust allows you to set a condition that must be met for beneficiaries to access assets. A condition could say, for example, that a beneficiary can use their inheritance if they go to college. 
  3. Special needs trust: This trust limits access to funds for beneficiaries who benefit from health care coverage or supplemental income. An inheritance could cause beneficiaries to lose these benefits if a special needs trust is not made. 
  4. Generation-skipping trust: This trust skips one generation for the benefit of the next. You can use this to avoid estate taxes. 

There are many other kinds of trusts for your use. You can seek legal guidance to learn more about estate planning.